John Stumpf, the CEO of embattled banking giant Wells Fargo (WFC) headed to Capitol Hill again on Thursday, this time to testify before the House Financial Services Committee about a customer accounts scandal that has rocked the bank in recent weeks.
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Under oath, Stumpf said he was “deeply sorry” for “violating the trust” of his bank’s customers and accepted full responsibility for “all unethical sales practices” in the Wells Fargo retail banking unit.
“I am fully committed to doing everything possible to fix this issue, strengthen our culture, and take the necessary actions to restore our customers’ trust. Let me assure you and our customers that Wells Fargo takes allegations of sales practice violations extremely seriously and that we will not rest until the problem is fixed,” he said.
In the wake of the scandal many in Washington and across the United States have called for Stumpf’s resignation in the wake of the scandal, calling him and the bank he leads untrustworthy. Dick Bove, equity research analyst at Rafferty Capital Management, said indeed the bank has set off a “witch hunt” for the banking industry as a whole as memories of the 2008 financial crisis flash though Americans’ minds.
“The Hensarling bill that would have eased regulation on banking is pretty much dead, you can’t get it through. Getting the Consumer Financial Protection Bureau in control of Congress and out of the Fed is probably not going to happen now. The likelihood of more capital requirements coming out of the Fed…going to put the squeeze on big banks again with more capital….all this happened because Wells Fargo tipped it in the wrong direction,” Bove said on the FOX Business Network’s Mornings with Maria.
He went on to warn, though, not to expect many new details to come to light during Stumpf’s appearance on the Hill.
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“He can’t say anything because anything he says that is meaningful will result in lawsuits,” Bove explained. “These guys have to stonewall because of legal issues. I think that could be enough to move Mr. Stumpf out of his position.”
Bove said he expects to see more investigation into Wells Fargo’s internal functions, though he doesn’t expect to see much progress for the next two to three years. Still, he said the damage is likely limited to the scandal at Wells Fargo, and not within the entire banking community.
“I would find it hard to believe a company like J.P.Morgan, Bank of America, or even Citi is putting on this type of stress to their client base. I would be shocked if they find out that is going on,” Bove said.